This program is responsible for reimbursing 21% of expenses on common consumer goods made using debit cards in retail or wholesale establishments, with a maximum limit of $18,800 per month.
The program called “Buy without VAT“, which began on September 18, with the purpose of reimbursing the Value Added Tax in purchases of essential products when using debit cards, will continue in force until December 31, 2023according to the Ministry of Economy.
This program is responsible for reimbursing 21% of expenses on common consumer goods made using debit cards in retail or wholesale establishments, with a maximum limit of $18,800 per month. The program is directed to retirees, pensioners, employees of private homes, beneficiaries of universal allowances for children or pregnancy, monotributistas, and employees under a dependency relationshipas long as your monthly income does not exceed six times the minimum, vital and mobile wage (this is equivalent to $708,000 gross per month).
It is relevant to highlight that shortly before the general elections of October 22, the Senate Budget Commission gave its majority approval to the project presented by the Minister of Economy and presidential candidate of Unión por la Patria, Sergio Massa, which seeks to convert the program into a permanent law, after having previously been approved in the Chamber of Deputies. The project is ready to be debated in the Senate in the coming weeks.
What is better: VAT refund or cash with discounts?
The implementation of “Buy without VAT” which implies a 21% refund on purchases made with a debit card, cash discounts began to appear in some stores to encourage consumers not to use the card. This is because it takes up to 48 hours for the payment to be credited to the merchant. In this framework, a report prepared by the IARAF tried to raise awareness that up to an accumulated consumption of $89,500 per month, the only cash discount that competes with the “Buy without VAT” is one greater than 21%.
In any case, the only correct way is to make a formal purchase, regardless of whether it is in cash or with a card. Given the tax burden, The seller has a high incentive to sell informally, which leads to cash discount offers.
With the “Buy without VAT” a consumer who pays with a debit card has a return of 21% (refund) within a maximum period of 48 hours. If you pay in cash, the discount should be higher at 21% to be the best option.
Buy without VAT: When is it convenient and when is it not?
However, the “Buy without VAT” program has a monthly refund limit of $18,800. Thereforeonce the consumption of $89,500 with a debit card in the basic basket has been exceeded, any level of cash discount is convenient against the option of payment with a debit card.
Before a consumption of $10,000 the purchase is more convenient via debit card, since the refund of $2,100 is a 110% greater than the cash discount of $1,000. This difference is maintained until the accumulated monthly consumption of $90,000. From this amount of accumulated consumption, it is convenient for the consumer to consume each extra peso of consumption in cash, because the refund of the “Buy without VAT” has a limit of $18,900 and was consumed with $90,000.
The majority of people who benefit from the “Buy without VAT” have a consumption of these goods within the established limit. Given the alternative of a cash discount, which gives the buyer a discount of $9,000 on $90,000 consumed, the alternative of“Buy without VAT” means one of $18,900 on $90,000 consumed.
The proliferation of discounts payments in cash reflects the search for a sale in informal terms. Given the validity of the “Buy without VAT”, the consumer obtains a significant 21% refundwhich leads to the cash discount offered to encourage you not to use the debit card must be older.
Source: Ambito
